What is a trademark and what is protected by trademark law?
A trademark is a sign that serves the specific and primary purpose of identifying the goods or services of a producer, thus allowing the consumers to distinguish goods or services of one producer from those of another.
Once a trademark right is granted by the relevant authority, the trademark owner enjoys the exclusive right to use the sign in relation to the goods or services covered by the trademark, and may prohibit others from using it without prior consent.
The sign may be composed of words, devices, letters, numerals, three-dimensional signs (shapes), a combination of colours or any combinations of the above. The sign however, must be visually perceptible. That is to say, a sign which cannot be eseenf but only heard or smelt cannot be registered as a trademark in China.
In order to be registered as a trademark, a sign must comply with four requirements:
- It must be legal (it must not be identical with or similar to the name or flag of a State, the Red Cross or other international organisations, have discriminative content against a nationality, or consist in exaggerated and fraudulous advertising etc.)
- It must not be functional. This requirement applies, in particular, to three]dimensional shapes that cannot be registered as trademarks if they originate only from the nature of the goods/services or exist necessarily for achieving a certain technical effect or enabling the goods to acquire their substantive value.
- It must be distinctive. Distinctive means that the signs must be easy to distinguish and be capable of distinguishing the goods/services of one person from those of another person.
Therefore, a sign that is exclusively composed of a generic name, design or model describing the goods or the services is considered as elacking distinctiveness. Additionally, a sigh that contains exclusively a direct reference to the quality, the main raw material, the function, the use, the weight, the quantity or other features of the goods or services, lacks distinctive features and cannot be registered as a trademark.
The above mentioned lack of distinctive features may however, be overcome if the trademark can be proved to have become easily distinguishable and acquired distinctiveness through practical use. For example: "American Standard" would certainly be considered as lacking distinctive characters, but the long and extensive use of this mark gives the mark sufficient distinctiveness, and it is now a well known registered trademark.
- The trademark you wish to register must be available. This means it must not be in conflict with a prior right. Prior rights are trademarks already registered or filed at the China Trademark Office (CTMO) for the same or similar class of goods or services. They may also be trademarks not registered but well-known. Prior rights also include copyright, a design, a personal name, a company name, etc. Before filing a trademark, it is advisable to conduct a trademark search in order to trace what has been registered, or filed (there is a certain period of uncertainty due to the time between the date of filing and the date of recording into the Trademark Office data base). Such verification only applies to trademarks, not to other types of prior rights (copyright, or name). Copyright, in particular, is protected by law, and does not need to be registered. The new trademark applicant will have to make sure that it is not simply reproducing a logo made by another person. If the design has been procured from an advertising agency or other provider, it should ensure that all guarantees are transferred to them.
What is the application process for registering a trademark in China? How long does it take and how much does it cost? What material do we need to prepare?
In China, the protection of the exclusive right to use a trademark is based on registration.
Registration can be obtained either by filing an application directly at the CTMO (Domestic application), or by filing an application at the World Intellectual Property Organisation (WIPO) on the basis of a trademark registered or applied in another country than China, requesting the extension of the trademark to China (international application).
Trademark application in China
It is necessary to file one application per class of goods or services, and to submit a precise list of the goods or services for which the protection is required (a general reference to the reference number of the relevant class would not be admitted).
The following documents need to be produced:
- Five copies, printed on smooth and clear paper, or replaced by photographs not larger than 10x5 cm;
- If colour is claimed, five copies in colour and one copy of the black and white design;
- For a three-dimensional or a colour-combination trademark, a specific statement indicating that the shape or the colour combination is claimed as a trademark, together with a literal description;
- If the trademark is in a foreign language, or contains foreign language, a translation must be provided.
- If the trademark was recently registered in another country (less than 6 months) or displayed in an exhibition in China during the past 6 months, it is possible to date back the application to the time of the prior registration or exhibition, by providing the corresponding evidence.
The cost is an official fee of RMB 800 (Chinese Yuan) per application covering 10 goods/services. If the number of goods/services exceeds 10 in one application, an additional fee of RMB 100 is charged for each of them. In addition to the official fee, it is normally necessary to pay the services of the trademark agent who files the trademark (an average of EUR 500 per trademark).
The registration procedure contains three stages:
- A formal examination where the CTMO verifies that the trademark file is complete and the corresponding fees have been paid.
- A substantial examination, where the examiner verifies that all the other requirements, absolute grounds (legality, non-functionality, distinctiveness) and relative grounds (availability), are met. Once the trademark has passed this examination, the trademark is preliminarily approved for registration.
- Publication in the official trademark gazette. The publication date marks the start of a three month period during which third parties may file an opposition with the CTMO. If no opposition is filed (or if an opposition is filed but fails), the trademark is registered and the period of validity of the trademark (10 years) starts at the end of the 3 months opposition period.
Due to the recent backlog of pending applications existing at the CTMO, the length of time was, until recently, considerable. It could take up to approximately three years for a trademark application to reach the stage of preliminary approval. In order to deal with this problem, the Trademark Office hired 300 new examiners to reduce the backlog. The time between date of filing and preliminary approval and publication should now be approximately 18 months unless an opposition to the registration is filed.
In any event, it may be advisable to file an international trademark application (extension of a national trademark to China, through the World Intellectual Property Organisation). A registration can be obtained in one year (see below).
The period of validity of the trademark is 10 years, renewable without limitations.
Can I apply for an extension of my domestic trademark or apply for international registration?
This possibility is only available to nationals of a state that is a party to the Madrid Agreement or the Madrid Protocol, the two main international treaties concerning the international registration of trademarks. (The two international conventions are very similar, but the signatories are not exactly the same. The main difference is that, in the Protocol, it is possible to apply for the extension of the trademark to other countries, even before it is registered in the country of origin, when it is still at the stage of application). China is a member of both. More information can be seen at http://www.wipo.int/madrid/en/
The application for extension to China is made to the office of WIPO in Geneva. For the nationals of a member State of the Madrid Agreement, the application must be based on a registered trademark. For the nationals of a member State of the Madrid Protocol, a simple trademark application, not yet registered, is sufficient.
Upon receipt of the application, WIPO enters a record in the International Register and publishes the application in the International Trademark Gazette and notifies the Trademark Authorities of the country(ies) concerned by the extension. A period of three months for oppositions by third parties starts on the 1st day of the next month following the publication in the Gazette.
If no objection is made by the Trademark Authority of the countries concerned, within a period of one year (Madrid Agreement) to 18 months (Madrid Protocol) from the date on which the trademark was recorded in the International Register, the trademark is considered registered, from the date of the certificate issued by WIPO.
The period of validity of the trademark is 20 years, renewable without limitation. However, fees must be paid in two instalments, the first after 10 years. Therefore, in practice, the duration is the same as for a trademark filed directly in China.
Do we need to use a specialised agent to register a trademark? Are we obliged to do a trademark search?
If the applicant is a foreigner who does not have a habitual residence or place of business in China, the use of a local trademark agent is compulsory for a (domestic) application in China. It is not compulsory for an international application. However, if any problem occurs during the registration process of the international application, the same rule as for domestic applications applies.
Conducting a trademark search is not compulsory. The CTMO runs its examination on the "relative grounds of refusal", which aims at identifying the existence of prior rights. However, making such a search is highly advisable, as it should allow the applicant to avoid filing for trademarks that are not obviously 'unavailable' and, thus, save money and time. A trademark search is not always fool proof. There is a certain part of subjective appreciation, where the trademarks are similar, but not identical. One cannot always predict whether the examiner will object, or whether the prior trademark owner will oppose. If the trademark is refused, or successfully opposed, the only consequence would be that it will not be registered. However, the risk is not too great if no commercial investment is been made until the trademark goes through the process of registration.
Finally, it is of the utmost importance to make sure that, when using a trademark in China, no registered trademark owned by a Chinese company is being infringed. Defending an IPR litigation case in China can be extremely uncomfortable for a foreign individual/entity and the amount of damages awarded by a Chinese court, in favour of a Chinese plaintiff can be substantial.
Does my home country trademark registration protect me in China?
It does not. The essence of a trademark registration is that it is limited by the national territory where it is registered.
However, there are exceptions: a trademark may still be protected in China even if it is not registered, but it needs to be proved that either, that it is well‐known in China, or that the challenged trademark has been filed in bad faith.
Is the trademark registration process the same for companies from different industries?
The registration process is always the same, regardless of the business of the trademark applicant. However, the duration may differ for domestic applications, because there are a larger number of applications (for example, class 25 has many applications).
What requirements do we need to fulfil in order to obtain registration as a well‐known trademark in China? What process is involved in the registration of a well‐known trademark?
Recognition of the well-known status of a trademark is made on a case-by-case basis, by the administrative or by the judicial authorities.
The first requirement is to fall in one of circumstances mentioned below:
- The earlier trademark is not registered in China and another trademark, which is a duplication, imitation or translation of the earlier trademark, is used or applied for, with respect to identical or similar goods, and is likely to cause the customer confusion. This becomes applicable when, for example, a foreign trademark owner wants to start doing business in China and realises, too late, that its trademark has already been filed, or even registered, by another person.
The trademark has been registered in China, and another trademark which is a duplication, imitation or translation of the earlier trademark is used or applied for in respect of different goods, and is likely to mislead the public and bring harm to the interests of the registrant of the earlier mark. This is called the "cross category protection", which can only be claimed if the trademark to be protected can prove that it is well-known.
Apart from these two specific situations, it is not possible to apply for recognition of the well-known status of a trademark, meaning that there is no set procedure to obtaining a well-known trademark.
The process depends on the authority before which the application is filed, and this, again, depends on the circumstances:
- If the application is part of an opposition against a trademark application, the application shall be made at the CTMO level. This may happen in two instances:
- The owner of a trademark not yet registered in China has discovered that an application has been filed for the same trademark, for the same goods (thus constituting an obstacle to his own application), and wants to oppose such application; or
- the owner of a registered trademark wants to prevent another person from registering the same trademark for different goods, because they consider such registration could still create some undesirable association with their own, and cause damage to their interests.
- The same situations as above may occur, where a rival trademark is already registered, and it is necessary to apply for its cancellation. In this case, the application to be recognised as a ewell]known trademarkf will form part of the application for cancellation and should be made to the appeal board of the CTMO, the Trademark Review and Adjudication Board (TRAB).
- Finally, the rival trademark may simply be used and the owner of the earlier trademark (whether registered or not) wishes to stop such use. According to the dual enforcement system prevailing in China, the trademark owner has a choice between submitting a claim to the People's Courts or to the Administration for Industry and Commerce (AIC). If the claim is submitted to the People's Court, the application to be recognised as well-known will be made together with the complaint and the Court will make a decision on both counts. If the claim is filed with the local AIC, the administration will verify whether the situation corresponds to one of the circumstances where it is possible to apply for recognition of the well-known status. Then, if the AIC is satisfied, it will transfer the case to the provincial level of the AIC, which will transfer the case to the CTMO, for decision on the well-known status of the mark.
How long does it take to obtain recognition of a well‐known trademark?
The length of time necessary to be recognised as a well‐known trademark is entirely dependent on the type of procedure chosen, or dictated by the circumstances. Oppositions and cancellations before the CTMO and the TRAB may take 3 to 5 years. An action through the AIC should not last longer than 7 months. A Civil action before a People's court would take an average of 12 months.
What are the differences between the administrative and the judicial recognition of the well‐known status?
The differences between judicial recognition and administrative recognition of a well‐known trademark are as follows:
- The possibilities of appeal are different. When a case is referred to the CTMO by a local AIC bureau, and the CTMO refuses to recognize the trademark as well‐known, the trademark owner is not allowed to appeal against such refusal. All other decisions related to recognizing a trademark as well‐known are subject to appeal.
- The influence of administrative recognition and judicial recognition is somewhat different. As the well‐known trademark obtained through administrative recognition is recognised by the CTMO, which is the only organisation of its kind in the AIC system nationwide, the decision made by the CTMO is quite authoritative in the AIC system and the AIC branches at local levels will strengthen protection of the well‐known trademarks recognised by the CTMO.
- As for the well‐known trademark status obtained through an individual case in a People's Court, usually it is recognised at the intermediate court or high court level. The recognition of a well‐known trademark may apply within the court system and the AIC branches within the jurisdiction of the court that made the recognition, but its effectiveness at other AIC offices is still unclear.
The conditions for re‐examination of an already recognized well‐known trademark are different in the AIC system compared to the court system. In a court, when the party concerned requests protection of a trademark already recognised as well‐known by the administrative organisation or by the court, and the defendant does not object to the well‐known status of the mark, the court will not make a re‐examination. If the defendant objects, the court will go through the whole recognition process as if no recognition had been made before.
In the AIC system, when a trademark has already been recognised as well‐known, if the scope of protection requested in the new case is the same as that of the previous case and if the other party does not object to the said trademark being well known (or the other party objects but fails to produce evidence proving that the trademark is not well known), the AIC will base its decision on the previous recognition. However, if the scope of protection requested in the current case is different from that of the previous case or if the other party objects to the said trademark being well known (and produces evidence proving that the said trademark is not well known), the CTMO or Trademark Review and Adjudication Board (TRAB) will again examine the materials relating to the recognition of the well‐known status of the trademark, and make a decision.
What kind of material should we submit when filing an application for recognition of a well‐known trademark?
According to the Trademark Law, the following factors are taken into account in the identification of a well‐known trademark:
- Extent of the relevant public's awareness of the target trademark
- Duration of the use of the target trademark
- Duration, extent and geographical scope of any publicising work for the target trademark
- Protection records of the target trademark as a well‐known trademark
- Other factors concerning the popularity of the target trademark
A specific regulation called "The Rules on the Recognition and Protection of Well‐known Trademarks" lists further materials that could be used as evidence to prove the well‐known status of a trademark. You will need to produce relevant documents certifying:
- The extent to which the said trademark is known to the relevant public
- The duration of use for the said trademark, including the relevant documents certifying the history and scope of use, and registration of the said trademark
- The duration, extent and geographical scope of any publicity activity for the said trademark, including documents relating to the mode of advertising, publicity activity and promotional campaign, the territory, the type of media, and the investment in advertising, etc
- The record of protection of the said trademark as being well‐known, including relevant documents certifying the fact that the said trademark has been protected as well‐known in China or other countries or regions
- Other relevant documents certifying the well‐known status of the trademark, including relevant documents concerning the output, sales volume, sales revenue, profit and tax, as well as sales area, in the preceding three years, of the principal commodity bearing the said trademark
It is not necessary to fulfil each of the above criteria. But special attention should be paid to materials relevant to the reputation of the trademark in China. This does not mean that other materials relating to the reputation in the rest of the world would not be accepted, but they cannot be considered as sufficient.
It is therefore extremely advisable to constitute and keep updating a file on each trademark, so that the production of such file can be made easily with corresponding translations in Chinese, within the required time limits, as the case may be.
How does a well‐known trademark differ from a standard trademark in China?
There is no 'well‐known trademark registry' as such, but once an administrative or judicial decision has been made, stating that the trademark is well‐known and ruling in favour of its owner, a record is kept and the owner may use such decision(s) in future cases in order to enjoy additional advantages.
It will also be easier to prevent the malicious registration and use of the trademark by others, even on non‐similar goods or services.
The well‐known status may also be used and an additional argument to prevent the use or registration of trademarks that, in normal circumstances (a 'standard' trademark), might not be considered as similar.
People's Courts are likely to grant higher damages, if your TM is considered 'well‐known'.
It is easier to prevent the registration of the trademark as an enterprise name (whereas if the trademark is not recognised as "well‐known", it is necessary to prove that the mark is used prominently in the enterprise name.
It is easier to prevent the registration of the mark as a domain name (whereas for a "normal" mark it is necessary to prove that actual transactions under the disputed domain name have been conducted).
As a European SME preparing to enter the Chinese markets, what do we need to know and what steps should we take to ensure protection of our trademarks before we enter the market?
A European SME should, even if it is not considering 'entering the Chinese market', consider whether its trademarks are likely to be a target for counterfeiters. If the risk analysis is positive, precautions should be taken, regardless of business plan in China.
The first step is, of course, to file the trademarks in China and to make a trademark search. This search might disclose one or several local applications (or registrations) for the same trademark, or a very similar one, some of might need to be opposed or cancelled.
Then, it really depends on the industrial sector. Market surveys, surveys during trade fairs, can be a good indication of whether the trademark(s) have already been spotted as a target by counterfeiters.
If I become aware of a competitor infringing my trademark am I obliged to take action? If so, is there any specific time frame within which the action must be taken? Do I lose my rights if I do not take action?
If the targeted trademark is already registered (not just applied for), it is compulsory to initiate a cancellation procedure before the TRAB within 5 years of the date of registration (unless one can prove that the trademark had been registered by fraud).
It is not possible to start a civil action against the owner of a registered trademark. The Courts are instructed not to accept such cases. It is necessary to obtain the cancellation first.
However, there is no statute of limitation in China that prevents a trademark owner to initiate action, administrative or judicial, against an infringer using a trademark that is not registered. Therefore, there is no 'obligation to take action' within a certain period of time and there is no loss of the right, if no action is taken.
However, if the trademark owner wishes to obtain a financial compensation for the damage caused by the infringement, he should be aware of two issues:
- The action should be taken before the People's Courts (the AIC does not have the power to grant a compensation, it can only act as a mediator, which is rarely productive)
- Damages may only be claimed for a period of 2 years calculated backwards from the date on which the legal action is initiated. Therefore, the more time the trademark owner waits, the more difficult it becomes to obtain full compensation for the damages suffered
But there are other considerations to be taken into account, such as what is commonly called "local protectionism". The bigger an infringer becomes, the more power he acquires to buy protection. Local authorities may be tempted to look into the latter from a different angle than purely legal, and to pay more attention to the stability of regional employment, or other distorting factors.
Therefore, it is, in fact, extremely important and much easier to take strong action against an infringer, as early as possible, before they become a powerful organisation. When doing so, it is advisable to do some 'forum shopping", i.e., choose a jurisdiction where, for example, infringing products are being sold, rather than the place where the factory is located, and where local "protectionism" is likely to apply. In that case, it will be possible to sue both the distributor and the manufacturer (if known) in the jurisdiction of the distributor.
How long does it take to resolve a trademark dispute case? How much does it cost?
The time and cost of litigation depends heavily on the nature of the dispute.
An opposition filed before the CTMO against another trademark will take around 5 years to reach a decision. An appeal before the Trademark Review and Adjudication Board (or a cancellation action directly filed before the Board) may last from 5 to 6 years. It may be followed by an appeal before the Administrative Section of the Intermediate People's Court which may last from 6 to 12 months. The judgement is itself subject to appeal, which may also last from 6 to 12 months.
A procedure before the CTMO costs on average € 800 ‐ € 1,200.
A procedure before the TRAB costs on average € 1,000 ‐ € 1,500.
A raid action organised by the AIC can be done in a few days, if correct and complete information has been gathered before‐hand. The decision of the AIC can take a few months before being issued. A standard investigation followed by a raid action costs approximately € 2,500.
The cost of a civil action introduced before the People's Court is more difficult to predict, as it depends on the size of the case, its difficulties, the defence, the situation of the Court etc.
What damages are available to a party who has had its trademark infringed? Do the amounts vary between trademarks, copyrights and patents?
According to trademark law, the amount of damages that the owner of an infringed trademark may obtain from the Court should correspond to:
Either to the profits made by the infringer, as a result of the infringement during the period of infringement (with the limitation of two years before the starting date of the action), Or, the losses suffered by the trademark owner because of the infringement, during the period of infringement (with the same limit as above).
It is often difficult to prove the amount of illegal profits – made by the infringer‐ or the exact loss of the trademark owner. The Law allows the Court to make a decision based on the seriousness of the case, and to grant an amount of up to RMB 500,000. An average amount equates to RMB 100,000.
In addition to damages, the plaintiff is also entitled to claim a sum corresponding to an estimation of 'reasonable expenses' incurred during the action against the infringer. Such amounts rarely reach the level of the actual expenses.
Copyright law and patent law contain similar provisions for the calculation of damages: illegal profits, losses and reasonable expenses. In addition, Patent Laws provide that the court may also base the calculation on an 'appropriate multiple of a contractual license fee'.
Is it necessary to register a trademark in Chinese?
Chinese consumers are likely to find a Chinese name for foreign trademarks either by way of translation or by way of transliteration. It is therefore advisable to register a Chinese version of a foreign trademark. Indeed, the registration of a trademark in roman characters does not automatically protect the trademark against the use or registration of the same or similar trademark written in Chinese.
There may be several possible ways to write a trademark in Chinese, by way of translation or by way of transliteration and in particular for the transliteration, there may be several available characters that sound alike and could be used.
This is why, unless the foreign word has a direct and only one translation in Chinese, the registration of the foreign word in roman characters is not enough to protect a Chinese equivalent, which is not simply a translation.
If such a Chinese version already exists in another Asian country, in order to avoid confusion it is advisable to ensure that the Chinese version is the same.
Should we register our trademark with the Chinese Customs?
The General Administration of Customs (GAC) is a centralised administration (all ports are under the direct control of the national administration, unlike other enforcement authorities, who are placed under the control of the local governments. The Customs authorities apply their control at the border, to merchandise coming in but also to merchandise going out. This is very useful to stop containers of infringing goods from leaving the country.
Recordal of the trademark is not a pre‐requisite, but it is highly recommended.
Without recordal, the Customs may still take action and detain goods, provided a specific request has been filed beforehand by the trademark owner, with all necessary factual information. The trademark owner needs to file whatever legal action is necessary within 20 working days following the notification of the detention of the goods.
Without recordal, Customs cannot take any initiative to detain suspicious goods, and the trademark owner misses many chances to stop counterfeits being exported.
On the other hand, if the trademark owner takes the precaution to record the trademark with the GAC, then the GAC may decide to withhold (for three days) a batch of suspicious goods. During that period, the trademark owner is notified and may apply for the detention of the goods. Customs may come to the direct conclusion that the goods are indeed counterfeit, and proceed with confiscation and apply a fine. In case of doubt, they notify the trademark owner who may start a legal action, in order to keep the goods under control.
The recordal is easy to make. It can be done online or by mail, to the Central office of the Customs. Documents required include
- A copy of the business registration certificate
- A copy of the trademark certificate
- Information regarding related licences (Customs do not want to withhold legitimate goods), photos of the goods and their packaging
- Any evidence relating to particular infringements
- A power of attorney in the name of the trademark agent responsible for the recordal process,
- A fee of RMB 800.
Once the trademark is recorded, the owner should bear in mind that the efficiency and determination of the Customs officers can be greatly encouraged if the trademark owner maintains a close working relationship with the officers, making sure they promptly respond to their notifications and provides adequate training to help them in identifying fake goods.
When an infringement of our trademark occurs, which is the best course of action; administrative, civil, or criminal?
It is important to note that it is possible to combine several procedures but it depends on the case and therefore, there is no definite answer to this question.
Organising an administrative raid can be done rapidly and is relatively cheap. Usually, the trademark owner receives information through the trademark agent/law firm (who obtain such information through their network of informants, and should verify the information before proposing the action). Then, a simple claim is filed with the local bureau of the Administration for Industry and Commerce (AIC) or the local bureau of the Administration of Quality Supervision Inspection and Quarantine (AQSIQ) – who are in charge of controlling the quality of products. They also take charge of 'raiding' premises, seizing the infringing goods and eventually issuing an administrative penalty.
This option is a relatively fast process but the efficiency (in the sense of deterrence) is limited. Furthermore, the trademark owner does not get any financial compensation.
Where it is obvious that the quantities are important and apply to (at least almost) identical counterfeiting, and the 'criminal threshold' is reached (a value over RMB 50,000) which defines the act of counterfeiting, it is possible to file a complaint directly to the Public Security (Police). As much information as possible needs to be gathered beforehand. Criminal prosecution is then overseen and supervised by the Procuratorate, (or Prosecutor, who represents the State in the procedure) which may lead, in successful cases, to severe punishments and fines by the criminal court, but still no financial compensation.
Finally, civil litigation is another available course of action. This type of action is recommended in cases where the issues are complex (such as an arguably similar trademark or a registered trademark used in such a way that it becomes an infringement).In civil litigation, the amount of damages can be a serious deterrent for the counterfeiter. Very often, the courts push for mediation and the settlement obtained can be significant, and immediately paid (which avoids the time and uncertainty of enforcement of the judgement).
All types of actions can, therefore, be combined: an administrative raid, followed by a civil litigation and a negotiation 'stimulated' by the threat of a criminal action.